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Morgan v. Baker Hughes Inc.

United States Court of Appeals, Tenth Circuit

January 15, 2020

KATHERINE K. MORGAN, as wrongful death representative of the deceased person, David P. Morgan, Plaintiff-Appellant,
v.
BAKER HUGHES INCORPORATED, a Delaware corporation, Defendant-Appellee.

          Appeal from the United States District Court for the District of Wyoming (D.C. No. 1:14-CV-00210-SWS)

          Earl Landers Vickery, Vickery & Shepherd, LLP, Houston, Texas (Arnold Anderson Vickery, Vickery & Shepherd, LLP, Houston, Texas; Frederick J. Harrison, Frederick J. Harrison, PC, Cheyenne, Wyoming, on the briefs), for Plaintiff-Appellant.

          Stephen P. Laitinen, Larson King, LLP, St. Paul, Minnesota (Stephenson D. Emery, Williams, Porter, Day & Neville, PC, Casper, Wyoming; Mark A. Solheim, Larson King, LLP, St. Paul, Minnesota, on the briefs), for Defendant-Appellee.

          Before LUCERO, HOLMES, and MORITZ, Circuit Judges.

          LUCERO, CIRCUIT JUDGE

         Katherine Morgan, as wrongful death representative of her husband, David Morgan, brought direct negligence liability claims against Baker Hughes Incorporated ("Baker Hughes") for the acts of its subsidiary, Baker Petrolite Incorporated ("Baker Petrolite"). This appeal requires us to interpret Wyoming law regarding the level of control necessary to hold a parent corporation liable in direct negligence for the acts of its subsidiary. We conclude that Wyoming law on this issue is consistent with the Restatement (Second) of Torts § 414 and its commentary. Accordingly, we hold that the district court correctly instructed the jury with respect to the relevant legal standard and did not err in making various decisions Morgan challenges on appeal. Exercising jurisdiction under 28 U.S.C. § 1291, we affirm.

         I

         On August 16, 2012, David Morgan was crushed to death by a heavy chemical tote while operating a forklift at his place of employment, a warehouse in Casper, Wyoming. The warehouse was owned by Baker Petrolite, a subsidiary of Baker Hughes. Following the fatal accident, David Morgan's widow, Katherine Morgan, sued Baker Hughes, claiming that its negligent control of safety operations at the Casper warehouse caused her husband's death.

         There have been two trials in this case. At the close of Morgan's evidence in the first trial, Baker Hughes moved for judgment as a matter of law. The district court granted Baker Hughes' motion. We reversed on appeal, holding that Morgan had presented sufficient evidence for a reasonable jury to conclude that Baker Hughes was liable for David Morgan's death. Morgan v. Baker Hughes Inc., 728 Fed.Appx. 850, 854, 858 (10th Cir. 2018) (unpublished) ("Morgan I").

         In so doing, we interpreted Wyoming law on the liability of parent corporations for the acts of their subsidiaries. Under Wyoming law, "a parent company can only be held liable for the acts of its subsidiary where it assumed some independent legal duty by retaining or exercising control over some aspect of the operation of a subsidiary corporation which was involved in the incident resulting in the plaintiff's injuries." Id. at 854. We cited Loredo v. Solvay America, Inc., 212 P.3d 614 (Wyo. 2009), as setting forth the requisite level of control. Morgan I, 728 Fed.Appx. at 854. In Loredo, the Wyoming Supreme Court held that for a parent to escape liability for the acts of its subsidiary, the subsidiary must be "entirely free to do the work its own way." 212 P.3d at 622. Applying this test, we phrased the question presented in Morgan I as "whether the evidence presented at trial, viewed in the light most favorable to plaintiff, is reasonably susceptible to the inference that Baker Hughes controlled operations at the Casper warehouse 'to such a degree that it directed how' forklift safety 'should or should not be done.'" 728 Fed.Appx. at 854 (quoting Loredo, 212 P.3d at 624). Because we concluded that Morgan's evidence was sufficient to support such an inference, we reversed the district court's judgment and remanded for further proceedings. Id. at 858.

         The second trial ensued. This time, Morgan moved for judgment as a matter of law. The district court denied the motion, and the jury returned a verdict in favor of Baker Hughes. However, before submitting the case to the jury, the court rejected Morgan's proposed jury instructions and overruled her objections to the court's instructions. Morgan timely appealed these decisions and moved to certify the controlling question to the Wyoming Supreme Court.

         II

         "Wyoming has explicitly rejected any doctrine of respondeat superior resulting in liability on the part of a parent corporation for acts of its subsidiary." Id. at 854 (quoting Loredo, 212 P.3d at 620). "Instead, a parent company can only be held liable for the acts of its subsidiary where it assumed some independent legal duty by retaining or exercising control over some aspect of the operation of the subsidiary corporation which was involved in the incident resulting in the plaintiff's injuries." Id. Merely advising a subsidiary on safety matters is not enough. See Fiscus v. Atl. Richfield, 773 P.2d 158, 162-63 (Wyo. 1989). "General, generic," and optional guidelines are therefore insufficient to establish liability. Loredo, 212 P.3d at 625. In contrast, a parent corporation does not escape liability under this standard unless the subsidiary is "entirely free to do the work its own way." Id. at 622.

         Several issues presented in this appeal turn on the same inquiry. As Morgan puts it, "[t]he disposition of this case depends on whether the test for direct negligence is the same in the parent-subsidiary context as in the independent contractor context" under Wyoming law. Morgan argues that Merit Energy Co. v. Horr, 366 P.3d 489 (Wyo. 2016), provides the correct standard, taken from § 414 of the Restatement (Second) of Torts. Baker Hughes argues that Loredo provides the correct standard. We conclude that both Horr and Loredo announce the same requisite level of control, drawn from § 414.

         A

         As we recognized in Morgan I, the Wyoming Supreme Court has held the "requirement that the parent assume some independent legal duty by retaining or exercising control over some aspect of the operation of a subsidiary" is "[e]ssentially . . . the same test that is involved in considering an owner's liability to the employee of a contractor." 728 Fed.Appx. at 854 n.1 (quoting Fiscus, 773 P.2d at 160). Accordingly, independent contractor cases provide guidance in assessing the level of control necessary for a parent corporation to be held liable for the acts of its subsidiary.

         In Jones v. Chevron, U.S.A., Inc., 718 P.2d 890 (Wyo. 1986), an independent contractor case, the Wyoming Supreme Court explained that § 414 provides "[t]he link between control and owner liability." Id. at 895. Interpreting that section, the court held that the owner of a work site owes a duty of reasonable care to the employee of an independent contractor if the owner "[1] retains the right to direct the manner of an independent contractor's performance, or [2] assumes affirmative duties with respect to safety." Id. at 896. The court recognized that under this standard, "[a]n owner does not have to retain a great deal of control over the work to be liable for an employee's harm under § 414." Id. at ...


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